CMS to test AI prior authorizations in Medicare to curb abuse

“Program integrity” has always been a charged topic in discussions about public insurance, never more so than now as Congress imposes enhanced work requirements onto Medicaid beneficiaries suspected of not struggling hard enough to stay afloat. 

However, it’s not beneficiaries themselves who are ultimately responsible for the majority of dollars lost to fraud, waste, and abuse. Instead, most improper payments tend to initiate with unethical healthcare providers, business owners, and straight-up criminals who are trying to game the system.  

Estimates place the annual toll of fraud, errors, and abuse in Medicare anywhere between $60 billion and $100 billion per year, depending on the definitions used, indicating an obvious need to get tougher on some of the nefarious schemes that suck valuable resources away from the people who need them most. 

But how can the government take action against bad actors without harming those in legitimate need of services? The majority of activities have been centered in the legal sphere, with organizations like the Medicare Fraud Strike Force bringing together state and federal law enforcement agencies to ferret out fraudsters.  

Now, CMS is aiming to harness the growing power of artificial intelligence to attack the problem from a different direction: requiring prior authorizations (PAs) for certain Original Medicare services that they believe are especially prone to inappropriate clinical usage. 

A new AI-powered CMS Innovation Center model, called the Wasteful and Inappropriate Service Reduction (WISeR) Model, plans to directly address the nearly $6 billion in annual costs tied to services with “minimal benefit.” 

“Low-value services, such as those of focus in WISeR, offer patients minimal benefit and, in some cases, can result in physical harm and psychological stress,” said Abe Sutton, Director of the CMS Innovation Center. “They also increase patient costs, while inflating health care spending.” 

These “low value” items and services include skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis, all of which will be included in the model’s scope. The model excludes inpatient-only services, emergency services, and services that would pose a substantial risk to patients if significantly delayed. 

For six performance years starting in 2026, CMS will enlist the partnership of technology companies in assigned geographic regions to build and deploy AI-enabled tools to improve the prior authorization process for the services under review.  

Successful applicants will have experience managing prior authorization processes for other payers, and must have clinicians on staff with the expertise to conduct medical reviews to validate determinations.   

“Under the model, providers and suppliers in the assigned regions will have the choice of submitting prior authorization requests for selected items and services or their claim will be subject to pre-payment medical review,” CMS explains. “CMS may include a pathway in the future that would allow providers and suppliers with strong compliance records to qualify for exemptions from WISeR review, which would further reduce administrative burden and allow greater focus on high-risk areas.” 

The participating technology developers will be rewarded for their efforts based on the effectiveness of their solutions across three domains, according to a CMS fact sheet: 

• Process quality: the volume of requests processes and number of non-affirmations and/or favorable appeal decisions 

• Provider and beneficiary experience: the timeliness and clarity of determination responses and explanations 

• Clinical quality outcomes: the use of alternative services and evidence of ongoing urgent need to address the targeted clinical issue 

“CMS is committed to crushing fraud, waste, and abuse, and the WISeR Model will help root out waste in Original Medicare,” said CMS Administrator Dr. Mehmet Oz. “Combining the speed of technology and the experienced clinicians, this new model helps bring Medicare into the 21st century by testing a streamlined prior authorization process, while protecting Medicare beneficiaries from being given unnecessary and often costly procedures.” 

Jennifer Bresnick is a journalist and freelance content creator with a decade of experience in the health IT industry.  Her work has focused on leveraging innovative technology tools to create value, improve health equity, and achieve the promises of the learning health system.  She can be reached at [email protected].